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Mexican Experiences with NAFTA


Code : ITF0017

Year :

Industry :General Business

Region : :Mexico

Teaching Note: Not Available

Structured Assignment : Not Available

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ORIGIN OF NAFTA NAFTAwas based on the ‘1988 US-Canada Free TradeAgreement’(1988 agreement). The US President George Bush Sr., the Mexican President Carlos Salinas and the Canadian Prime Minister Brian Mulroney, were the signatories of the agreement on behalf of their respective nations. NAFTAencompassed intellectual property rights like trademarks, patent rights and copyrights, apart from safeguarding all the clauses of the 1988 agreement. In 1994, NAFTAcreated a regional trade block (Exhibit I) in NorthAmerica, which had a total population of 406 million and an annual production of $11 trillion10 in goods and services. ...

POLITICAL REFORMS IN MEXICO In 1988, the US President, George Bush Sr. (Bush), proposed a free trade agreement to the Mexican President Carlos Salinas (Salinas), which was initially rejected by Salinas. After the fall of Berlin wall inNovember 1989, Carlos Salinas, on his visit to Europe, noticed that the European countriesweremoving quickly towards economic integration. InMarch 1989, Salinas accepted the proposal of Bush and soon started the negotiations on the proposed free trade agreement...

SELECTED INDICATORSOVER GDP IN MEXICO ITheMexican tradewith the USand Canada increased by 179%between 1993 and 2002. The opening up of theMexican economy as a result of NAFTA, led to a substantial increase in Mexico’s trade with other non-NAFTAcountries, which grew by 188% between 1993 and 2002 (Exhibit IV(a)).Mexico’s tradewith theUS increased from$85 billion in 1993, to $245 billion in 2000.As a result,Mexican imports increased from$45.3 billion to $113.7 billion...

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CHALLENGES FOR MEXICO The changes brought about by NAFTA in Mexico, however, left certain questions to be answered. The foremost was the decrease in real wages inMexico, inspite of an increase in the overall productivity, after joining NAFTA. A study conducted by ‘Global Policy Network’18, under the Mexican labour economist, Carlos Salas, pointed out that, between 1994 and 2001, in theMexican manufacturing sector, although productivity had increased by 50%, real wages had decreased by 11%...

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